Atlantic coking coal: Market low elicits interest

US coking coal prices have held steady today but the recent weakness in the market has continued to encourage pockets of spot buying from Turkish and European mills along with an annual tender from Brazil this week.

The Argus daily fob Hampton Roads assessment for low-volatile coking coal is flat at $100/t but continues to face limited buying interest in Europe. High-volatile A and high-volatile B prices are unchanged at $102/t fob Hampton Roads and $89/t fob Hampton Roads respectively, with some market participants seeing these prices potentially at a market low for the year.

A Brazilian mill issued a tender yesterday seeking 450,000t of mid-vol coals and 420,000t of low-vol coals to be shipped in 2021. Suppliers have the option to offer 100pc or 70pc of the requirement, with submissions to be made by 2 September. "The requirement is similar to the one issued last year but it's positive to see no drop in demand," one miner said.

Buying in Europe remains limited, with some mills seeking flexibility in their shipments and taking advantage of lower coal prices if possible to soften the pressure of high iron ore costs. A European mill has an ongoing requirement for low-vol and high-vol B coals to be delivered in the fourth quarter. "We are seeing a lot of people come out early to capture these low prices, particularly with Chinese buying curtailed at the moment," one US miner said.

While some mines that had put production restrictions in place in the first half of this year, either because of Covid-19 or weak market conditions, have been able to turn away buyers pushing down bids, there remains suppliers in the market willing to offer discounts to shift existing stock. "We're probably going to see more of deals like that to liquidate stocks but these would only be for the spot market. No-one will want to lock in prices like that for the whole year," the miner added.

Import restrictions in China, while not officially applicable to Russian cargoes, have affected unloading in general and pushed more Russian offers into the Atlantic. A Turkish mill secured high-vol Russian coals alongside mid-vol coals from the US and Australia in its recent tender. "A Russian high-vol coal would have to come at a discount to US material, so I'd imagine a workable price to be somewhere below $100/t delivered for European mills who want to buy Russian coal," a mill said.

Russian producers are offering met coke into Europe at $200/t cif ARA and coke breeze at $120/t, a northwestern European mill said.

"We haven't set our production level yet for the fourth quarter," a European mill said, "but we're not seeing an improvement in offtake and I'd be very careful about so-called signs of recovery. We are basing our 2021 planning on the assumption that we will be producing at 85pc of capacity for the full year."